Wednesday, February 25, 2009

This recession this time just seems to astonish everybody including the experts. If you own stocks, the body blows you have to take in a week like this are just devastating. Some pundits are even questioning whether "buy and hold" is dead.

I've come across an interactive chart that's proving interesting. By using the scroll bar that comes on a computer mouse and positioning it in the white space above the blue line you can get the chart to show various historic ranges of the DOW. When you quit scrolling and just move the mouse to where the left side expanded to, it gives you an historic figure for that index. [BTW I just realized when writing a post today, you have to try not to use a sentence that uses the plural of 'mouse' or you run into the quandary of "is it 'mice' or 'mouses' when it comes to computers?]

Although I was a stock purchaser as far back as 1976 or so when I got stocks through a company purchase plan [buying their stocks], I don't really consider myself to have been a stock market investor until around 1992. I continued to dilly dally with stocks before then, but I knew very little about how to go about it; I was really just a gambler in stocks, and a piker at that. And doing it in the perfect manner to assure that overall I would fail to see a profit: buying when I had money and selling when things were tight. That is a prescription for 'buying high and selling low' I came to realize, as of course I tended to have money when the economy was good and needed it back when the economy was bad.

Anyway, in the age of IRA's and when I seemed to have enough put away in bank savings to be able to invest in a recommended "buy and hold" manner, I also came across a very interesting claim. This claim probably derived from something factual but gets repeated here and there in a manner without citing sources, so there are different versions, but basically it goes like this:

*stocks lose value very frequently in 5 year time periods.*10 yr time periods are less risky but sometimes stocks do lose money in such periods.*there is no 15 yr time period in which stocks lost money.*there is no 20 yr time period in which stocks didn't outperform any and all other investments, including any period around the Great Depression.

Now I have come to realize that these claims do make some assumptions:

*this assumes you bought stocks in a recommended manner such as systematic purchasing [that creates the benefit of cost averaging].

*to test this there is an assumption you aren't trying to pick out a single stock purchased on, say, the day before the stock market crashed in '29, but a diversified range bought over time.

*the rule assumes we aren't looking at absolute buy and hold, but managed investments. In other words, if you own a mutual fund share, or just look at the historic DOW, these are things that have been managed. The dogs got ditched, and newer more profitable companies are now in the mix.

So, I started to wonder if the above tool [see link] isn't a way to kind of check this out? This week is a good time to try, the market took a dive and if anything it seems to me this is a harsh measure as it mimics buying stocks on just one day and taking a specially selected snapshot to make the comparison look bad. Or perhaps someone can tell me why this doesn't work as a way to test the rule.

In any case, I proceed with the scrolling and find that the comparison with a year or two ago shows horrible losses in the 40% range. If I go back 5 years I still get a horrid 30% or so bombshell. Going back 12 years to March 19th 1997 I get a $7200 DOW figure, about where it is now. The 15 year-ago period, which was pretty stable for weeks, is at around 3800 for the DOW. It certainly does seem unlikely we could drop to that.

Twenty years? Dow was at about 2000 points. Could you make a case that this roughly 400% increase over our current horrid snapshot is better return than any and all other investments for that period? Real estate, which I dislike investing in except for my own home, perhaps did better, but it is a complicated calculation what with all the expenses involved with owning property. You get the snapshot phenomenon with Real Estate, too.

I'd say it's pretty remarkable how the rule has held up even with the current snapshot. Certainly the 15 yr rule has held up and looks safe, something I have counted on very heavily [and 15 years ago is about the time I really started investing in stocks too]. The 20 year rule can make a case although I am less sure about that. I'll bet it is better than if you had invested in gold, though.

Sunday, February 22, 2009

Especially hilarious or incredibly brazen email spam I have collected over the years. The Chase Credit card is probably legitimate but an example of a company that sends out their, well, spam alright, that looks like it came from Nigeria. You can click on the image to get a larger size.

Note to RSS folks, I had to re-do this, one item didn't belong in the folder!

Saturday, February 21, 2009

Quite interesting article. I was definitely hearing news that "job growth for men" had been a problem area even during overall recent economic growth prior to the crash. Makes you wonder if it wasn't one of the signs of an imminent problem.

Friday, February 13, 2009

Sue alerted me to the news that a court has ruled on current autism cases. WSJ has a good article, and it's also in their health blog. Sometimes I think the "comments" sections are a real glimpse at just how nutty so many people are. The first commenter in the health blog says

"I think part (if not all) of the Autism Epidemic is caused by the SIDS Back to Sleep campaign" [having kids sleep on their backs].

OK, let's ignore the article and immediately jump on a chance to bore everybody with our own stupid agenda!

I am definitely growing into a someone who really is starting to worry that the average guy now is just a nut.

Wednesday, February 4, 2009

I'm hearing stories that it's just unfortunate that the compensation for Wall Street Fat Cats is called "bonuses" when it's actually just delayed compensation, albeit based on performance. Furthermore, from this article,

"The $18 billion sum was down 40 percent from a year ago, and it was paid to 160,000 people. Most of them earned less than the average of $112,500 apiece."

Well, OK then, with Obama's cap at $500,000, the people I would care about have nothing to worry about. And the ones making millions can tough it out or forget coming to the public trough.

About Me

THAT REALLY BOTHERS ME

I guess we will find out whether or not I should be blogging. But here goes; I really can get going on some of these things, so we'll put it out there and see if we get yawns, catcalls, or maybe some responses.